Heat pump grants face cuts to help pay for defence spending

What's happening

Ministers are preparing to reduce funding for the Boiler Upgrade Scheme (BUS), the grant that helps households in England and Wales switch from a gas boiler to a heat pump, according to The Guardian. The paper reports that the energy secretary, Miatta Fahnbulleh, has been told to find more than £2bn in savings from her department's budget to help cover higher defence spending, and that sources say part of this will come from cutting hundreds of millions of pounds from the scheme's £2.7bn five-year budget. The scheme would not be scrapped, the paper says, but its funding would shrink.

The Guardian reports the scheme has subsidised nearly 80,000 heat pumps since it launched in 2022, with some off-grid properties able to claim as much as £9,000. It also cites Octopus Energy's chief executive, Greg Jackson, warning that "cutting the engine now would be brutally damaging," and the charity Nesta arguing that scaling back support makes little sense while gas prices remain high. No final decision has been confirmed — the Department for Energy Security and Net Zero told the paper it will "set out how we will fund essential investment in our national security this autumn."

What this means for your costs right now

Nothing changes immediately. As things stand, the Boiler Upgrade Scheme still offers £7,500 off an air source or ground source heat pump in England and Wales, provided the installer is MCS certified. In Scotland, the separate Home Energy Scotland grant offers up to £7,500, plus an optional £7,500 interest-free loan. Installing a heat pump also qualifies for 0% VAT on the equipment and labour, as part of the government's relief on energy-saving materials that runs until 31 March 2027.

Put together, that support is a meaningful share of the bill. A typical UK home needs roughly an 8 kW system, which runs £10,000 – £16,700 before any grant, with a typical cost of around £12,900. Subtract the £7,500 grant and the gap to a like-for-like gas boiler narrows considerably — which is exactly the dynamic the Guardian's sources point to as a reason the scheme has grown popular enough to attract Treasury attention.

Why the uncertainty matters for timing

If the funding is trimmed later this year, as the report suggests, the practical risk for homeowners isn't that the grant disappears overnight — it's that a smaller pot could mean the scheme runs out of allocated funding sooner, or that eligibility tightens. Anyone budgeting for a heat pump this winter should treat the current £7,500 grant and 0% VAT as available now, not guaranteed for next year. If you're already gathering quotes, there's no cost advantage to waiting: the subsidy is live today, and nothing in the reporting changes an installer's price before any grant is applied.

It's also worth remembering that the wider Warm Homes Plan, published in January 2026, commits £15bn through to 2030 for grants to low-income households and loans being phased in — a separate pot from the Boiler Upgrade Scheme and not mentioned as part of the reported cuts.

Checking the numbers before you commit

Because a heat pump is one of the bigger-ticket jobs in the home, it's worth getting more than one quote and checking each against a realistic range before signing anything, especially while the funding picture is in flux. We build our Air source heat pump using labour hours at local rates plus materials, then check that against market prices and quotes installers are actually giving customers — so it's a reasonable benchmark to hold a quote up against. If a price feels high or low, our "is my quote fair" tool can help you see whether it lines up with what similar jobs are costing elsewhere.

For households currently weighing a heat pump against a replacement gas boiler, the calculation still favours doing the sums properly: a new gas New boiler typically costs £2,200 – £3,650, with no VAT relief or grant attached, while a heat pump after the current £7,500 grant can come out close to or sometimes below that, depending on your home's size and existing heating system. That gap is the reason installers and campaigners quoted by the Guardian are so focused on keeping the grant intact — and the reason it's worth moving on a quote while the current terms still apply.

We'll update this guide if the government confirms changes to the Boiler Upgrade Scheme's funding or eligibility this autumn.